Luxury Products: Status Symbols

How The Most Powerful Men Project Status

The recent financial crises have exposed the enormous power wielded by financiers. These top bankers, hedge-fund managers and other financial-services industry determine many aspects of the wider population’s lives, shape the outcome of the regulation process and influence geopolitical order. I'll call them the “elite,” as they occupy commanding positions and exercise control over knowledge, skills, talent, and wealth.

Though these elites hold great power over us, most of us fail to understand them. To better grasp their impact on our lives, this series aims to shed light on what makes them, well, elite.

This first article explores the relationship between luxury products and status.

How do we recognize elites on appearances alone? From the outside, we can’t judge if J.P.Morgan’s Jamie Dimon has a large bank account or if Larry Page and Sergey Brin own shares in Google. Does it actually matter, though, if we can? Apparently it does. Luxury brands and high-end clothes wouldn’t sell so well if it weren’t for the elites. One could argue that the elites’ craving for the latest sports car, designer clothes and diamonds for their wives stems more from pleasure than from purpose, yet a closer look reveals something else.

Status and identity

Money and control of scarce resources are not only what matter to elites. They also need to noticeably distinguish themselves from others. Large and richly ornamented residences, expensive jewelry and fine art are just a few external signs of superiority, but manners, taste and leisure activities also help to mark distinction. It is not sufficient to possess wealth or power only; they must put in evidence. As French sociologist/anthropologist Pierre Bourdieu argued, financial power might be the ultimate basis of power, but this wealth can only wield power in the form of all kinds of capital (cultural, social and symbolic).

Priceless collectibles, lavish mansions and the newest, flashiest cars are the symbols on which elites rely in marking their status and symbolic superiority. Dressing smartly, bragging about a chalet in St. Moritz and adorning a mistress with Cartier symbolize power — not only to the outsider, but to insiders as well. The elite member with a bigger and bolder mansion than his equally rich neighbor also bests that neighbor as alpha male. The banker who drives around in the latest Ferrari — because he was able to skip Ferrari's waiting list — isn't just showing off his wealth.

Status and exclusivity

Such status symbols make the elites’ exclusivity known to the outside world, and it is the pomp and ostentation that we outsiders envy — the stuff we can only dream about. But the symbols of wealth, success and elite distinction not only set the elites apart from the rest of the population; they appear to garner a payoff too. A recent study on elite business consultants illustrated this: The advice of a consultant arriving with an expensive car is judged worthier than the same advice from someone with a lesser car. Therefore, symbols of wealth create more wealth.

Are Page and Brin richer than Dimon, then, because they have a fancier private jet? Maybe, but every elite setting has its particularities when it comes to symbols of elite superiority. Page and Brin can easily show up wearing jeans in Silicon Valley, but Dimon won’t be taken seriously if he doesn’t wear a suit and a tie. The underlying sociological logic, however, remains the same, as elites must always show their power through their status symbols. After all, we can’t see the millions on someone’s bank slip from the outside.